Managing Your Required Minimum Distributions

The IRS mandates that you withdraw a certain amount of money, referred to as a required minimum distribution (RMD), from your retirement accounts each year once you turn 70½. The deadline for taking RMDs is December 31st of each year. If missed, the IRS penalty may be severe—50% of the RMD you did not withdraw.

RMD rules apply to the following tax-deferred retirement account types:

Traditional IRAs

Rollover IRAs

SIMPLE IRAs

SEP IRAs

Most small-business accounts

Most 401(k) and 403(b) plans

Taking RMDs

If you have an IRA, you may delay taking your first RMD (only your first) until April 1st of the year after you turn 70½. However, if you choose to delay your first RMD, you’ll have to take both your first and second RMD in the same tax year.

For your workplace retirement accounts, if you are still working and don’t own more than 5% of the business you’re employed by, you may be able to delay taking an RMD until April 1st of the year after you retire. Keep in mind, this rule does not apply to IRAs or plans with companies you no longer work for.

Inherited IRAs and Retirement Plans

Your RMDs from your IRA or plan will cease after your death, but your designated beneficiary (or beneficiaries) will typically then be required to take minimum distributions from the account a year after death. A spouse beneficiary may generally roll over an inherited IRA or plan account into an IRA in the spouse’s own name, allowing the spouse to delay taking additional required distributions until he or she turns 70½. But, if you inherit a Roth IRA and transfer the assets to an Inherited Roth IRA, unlike the original owner, you must take RMDs. If the assets have been in the Roth IRA for five or more years, these RMDs can be withdrawn federally tax-free.

Our team of professionals help manage our clients’ RMDs and guide them through each step of the process.

We calculate your RMD.

We’ll determine your distribution amount each year based on your retirement account balance as of December 31st of the previous year and will notify you of the amount you must distribute by year’s end.

We allocate your RMD according to your wishes.

We can transfer your money to a non-retirement account, or deposit it directly into your bank account

We maximize tax benefit of charitable giving

If you’re an eligible IRA owner, you can have your RMD made payable directly to a qualified charity—up to $100,000 annually. This is called a Qualified Charitable Distribution (QCD). This will satisfy your distribution requirement, and you won’t have to pay income taxes on that money. The only caveat is that you must wait until at least the day you turn 70 1/2.

If you have any questions about RMDs or our role in managing them, please don’t hesitate to contact us.